Hugo Kimber: 0:03

People have started the process with that, "Well, we've gotta do this, but you know, we'll, just make it as painless as possible for us, and we'll just move on". And then by the time they've actually done that, they've started to get on board with the entire process and they have done because they're seeing that, for example, investors and, and customers are interested in what they're saying and what they're doing, and then that feeds through into them wanting to do more granular work around data

Tom Raftery: 0:30

Good morning, good afternoon, or good evening, wherever you are in the world. This is the Climate Confident podcast. The number one podcast, showcasing best practices in climate emission, reductions and removals. And I'm your host, Tom Raftery. Don't forget to click follow on this podcast in your podcast app of choice, to be sure you don't miss any episodes. Hi, everyone. Welcome to episode 113 of the Climate Confident podcast. My name is Tom Raftery, and before we kick off, I just want to take a quick moment to express my sincere gratitude to all of this podcast's, amazing supporters, your support has been instrumental in keeping this podcast going, and I'm truly grateful for each and every one of you. If you're not a supporter, I'd like to encourage you to consider joining our community of like-minded individuals who are passionate about climate. Supporting this podcast is easy and affordable with options starting as low as just three euros or three dollars. That's less than the cost of a cup of coffee. And your support will make a huge difference in keeping this show going strong. To become a supporter, simply click on the support link in the show notes of this episode or any episode. Or alternatively visit. Tiny url.com/climate pod. Now without further ado on with the show today, I have my special guest Hugo Hugo. Welcome to the podcast. Would you like to introduce yourself?

Hugo Kimber: 1:57

Thank you, Tom. Yes, I'm the founder and CEO of Carbon Responsible. Uh, we've been providing measurement and reporting solutions for just over 11 years now. Um, and I first, um, began building solutions for this, um, about in about 2006, a while ago now.

Tom Raftery: 2:17

Wow. Yeah. That, that is a while ago. And why, Hugo, what made you decide to jump into this space?

Hugo Kimber: 2:24

Because I'd worked in, um, global, hospitality and travel, which is a, certainly a sector that's always thought quite a lot about sustainability. But it was quite clear as we started to move into a, a very defined climate challenge that we didn't have the tool sets to be able to actually measure and quantify, um, which then makes it very difficult to act. So, um, I saw that that was gonna be a need, um, and assembled the, the skills and research to be able to do it.

Tom Raftery: 2:51

Okay. And what have you seen evolve since 2006? From 2006 to today 2023? What has been the big change or changes?

Hugo Kimber: 3:05

I, I think the big changes have mostly come in the last few years. So obviously we're, you go back to 2006, everything was very voluntary. There wasn't a huge amount of measurement going on. And there was a, you know, quite a lot of drive for carbon neutrality and the use of offsets to, to start to raise awareness and, and take action. Really, I think from 2013 onwards, some of the biggest companies had to start to report and were reporting. And now in the last two to three years, the huge amount of, frameworks, um, compliance requirements, legal requirements reporting have transformed this from something that was, um, obviously entirely voluntary, to something where people are starting to realize that there are kinda wider climate and commercial considerations around, um, around emissions reporting and emissions reduction.

Tom Raftery: 3:53

Okay, and who would be a typical client for yourselves?

Hugo Kimber: 4:00

So typical clients would be, um, large companies, um, and organizations, um, or investors. So we're, we're, most of the market is driven by corporate compliance, um, and also by investors who have moved very rapidly to try and encourage the greater disclosure and greater reduction, amongst participants in the financial services market. I think what pretty much all of our clients have in common is that they've probably been referred or introduced to us, and they all actually want to be able to, achieve and deliver, in terms of carbon management and carbon reduction through target setting, and trying to do the best that they can, which is, you know, from our point of view, great to work with.

Tom Raftery: 4:39

Okay. And for them, are you simply doing the measurement and reporting? Are you doing submissions to bodies like CDP? Are you doing, consultative work on how to get emissions down? Where do you fall on that whole spectrum of, of services?

Hugo Kimber: 4:59

So we provide everything really from the beginning, which is data capture and data optimization through to reporting and disclosure. We're then able to provide target setting, um, reduction modeling. And then move our clients on, um, supporting them around frameworks such as SFDR or TCFD. We do do separately work, to support, clients who are limited assurance around disclosure, which is something like the CDP. But obviously we can't do that where we've actually done the measurement ourselves. Um, that's kinda defeats the purpose of limited assurance. So it's a wide range of services, but we're not a consultancy I say we very much are involved in, you know, the collection and optimization of that data and the building of technology solutions to make that easier for our clients to be able to manage. And the, the consultancy or the expert advisory is really an adjunct to what we're doing with those clients, rather than us going out and saying, you know, we'll help you with TCFD, but don't worry about the metrics.

Tom Raftery: 5:59

Okay. And what are the typical challenges that you know, you see your customers facing? It's, it's a large space there's a lot of people in there, uh, and a lot of people trying to get into this space, as, you know, potential customers of yours, not. Necessarily competitors also, although that's a, a rising space as well, thankfully. Yeah. you might not agree, but thankfully , it's, it's,

Hugo Kimber: 6:22

yeah. No, I think it's a good thing. Yeah.

Tom Raftery: 6:25

Good. And, and no, for people who are, you know, trying to start on that journey, what are the big challenges they're facing?

Hugo Kimber: 6:33

So I think some of the, the challenge is really understanding what the space is about and what they need to do. But probably the key challenge is around data and data collection and data quality. So if you imagine that everybody, every business is going to report and have internal reporting around financial metrics and around, you know, operational metrics that are important to them to be able to run the business they need to run. But some of that means that particularly in areas, um, where you might be capturing, employee activity around business travel, for example, through an expensive system, that won't typically hold the data that would give you the most accurate results. In some cases can be quite difficult to, to extract so that there are some practical issues that we quite often have to navigate and it can take a client, you know, anywhere between 12 and 18 months to get to a point where they really feel comfortable with the data and that data is good enough that we've driven down any estimation areas that may, be existed within it. and that they've got data they can use and is, is actionable intelligence for them. And also has commercial value. So we are not just looking, at that data from the point of view of how that works for disclosure and how it works for target reduction. We're also looking at the, you know, commercial values of operational cost savings that come from reducing carbon, across the board.

Tom Raftery: 7:51

And how do you improve that data for them? I mean, if, if it's not great data starting off, what are, what are kind of pathways to making it better?

Hugo Kimber: 8:01

So in some cases it's, it's frequency of, of submission. Typically if you are submitting everything on a 12 month basis at the end of 12 months and you've got a very tight deadline to be able to report on, that's not great. Um, so frequency is good. In those areas where there is not, you know, data is not of high quality, um, or it's backed into financial data only. We're able to advise and to help clients structure that data without undue, effort for them to make sure that their reporting accuracy is as high as it can be. And that the, the point of having highly accurate reporting numbers is that when you start to set targets, it becomes, you know, much easier to be able to manage those targets, and have certainty and confidence in those targets from the outside where your base data is good.

Tom Raftery: 9:20

Okay. Then you've got another challenge I have to imagine, around different reporting platforms. I mean, you've got the, you mentioned the T C F D. Mm-hmm.. You've got C D P, you know, you've got, how do you handle that for clients?

Hugo Kimber: 9:35

So a lot of the, the data that we collect, for example, um, would be, is the same that is required for some of the outputs for, let's say, climate PAIs in, in SFDR for the streamline engine carbon reporting, but the metrics required by TCFD they're just in a different format. So, our ability to be able to take that core data and then return that in multiple formats is, is, is useful for clients. But one of the bigger issues is probably, the interoperability or lack thereof of the many standards and frameworks that have emerged in the last two to three years, and ideally some, you know, further work on those around harmonization will occur. Um, otherwise it's just going to create a very big barrier for a lot of companies, um, or, investors who are involved in, in multiple markets and therefore multiple frameworks. Um, that could just create a, a compliance and disclosure headache, all of it. So ideally these things will all come together over a period of time, and particularly also in standards, well, we've obviously had the greenhouse gas protocol, corporate accounting standard as the kind of bedrock of a lot of things that people are doing. But then we see modifications of those different, applications and, um, almost like, uh, slightly different variance of, of that standard. And we probably need more around what we've already seen from people like ISO or BSI and others. Um, and also the accounting standards. So everyone's got slightly different ways of, of doing this. It would be, um, obviously helpful that these things start to get greater interoperability and were were more linked together.

Tom Raftery: 11:13

And is that happening or is it likely to happen or what? What's, what's going on there?

Hugo Kimber: 11:22

I think it is likely to happen, but it will take time. Obviously many of these standards are very new and they're all, as I say, slightly different. And everybody, you know, wants their own standard to be applied in the area that they require it to be applied in. So, um, there's a little bit of, I wouldn't say competitive tension in that, but everybody's got their own purposes behind why they created a framework. But ideally that, you know, we're certainly seeing this, an intent to work together. But it's how that practically drives out and, and how that works for, for clients at the end of the day. And they'll be the best judges of that cause it'll be quite how simple or complex it's for them to subscribe to multiple frameworks in multiple geographies.

Tom Raftery: 12:05

All right. And we're seeing quite a bit of reporting of instances of greenwashing, which, you know, from a reputational perspective, doesn't do this space any favors. I'm not saying it shouldn't be reported, obviously it should. Uh, do you think the, the, lack of interoperability between the standards contributes to that, and how do we fix that?

Hugo Kimber: 12:28

So I think that it's, um, the, the genesis of greenwashing is, is probably mostly in a lack of understanding of what the terms mean, but, you know, that can run the whole way through to intentional, um, uses of phrases and, um, and, you know, uh, narrative that suggests action or action doesn't really exist at all. Now I think that if we just, if we just take the UK environment, uh, as an example, so the competition markets authority looked at particularly, they looked at retail and travel sectors as an example of this, about over a year ago now. Um, and then produced a report suggesting that most of the companies that they've reviewed, had implicit targets but not explicit targets. And many of them would be found, you know, to be greenwashing in the sense that you and I might describe it. And what they did was to drive out a number of, of, of standards and, and, suggestions, which they don't need new laws for because we already have laws on trading standards and, trade descriptions and that type of thing. And they were saying that really at the heart of it, if you were gonna make a claim, you had to back the claim up with data and metrics that could be easily understood by the consumer. So that's not a kind of 20 page, you know, highly technical report that is clear numbers that, that explain why that statement can be made. So I thought that was, that was a good start. We're going to see, um, the Financial Conduct Authority deliver their final view on sustainability, um, disclosure you know, in the coming months. And again, that's quite interesting because it's looking at different categorizations of what, funds or, or financial, products might look like. And then has a, uh, where, where you are not able to subscribe to any of these things, kind of catch or anti-green wash rule, which says that if you're using any of these phrases, around sustainability or anything else that's something that won't be, won't be tolerated unless it's backed up by, you know, one of the labels that they're suggesting and the criteria that go with them. So I think there is enough clear guidance for people, and it's about having some numbers and I think this is really, you know when we look at the removal of advertising campaigns, for example, because people are saying things are good for the planet. But how is it good for the planet? There is no, there are no numbers that suggest that, and therefore we've seen instances where campaigns have been removed, and I think that the, the, this has differing areas of risk. So it risks, um, you know, confidence in, in where everybody's going, what they're doing in the, in the journey, to net zero. But it also has significant brand risks and those are much worse in those areas, particularly in things like, you know, potentially fashion and retail, where a lot of this is very much embedded in the brand story. But we've looked at a lot of this. We did a benchmarking survey in, in 2021 of retail. Um, and fashion across the uk, and we found that although we could almost universally find commitments to, greater sustainability and, and products helping the planet, we found only minority people were actually reporting. And those that were reporting were not necessarily reporting full impact, in a way that their, um, their statements would suggest. So I certainly think we've seen that improve to, to an extent, but that's a huge corporate risk. As we've seen recently with, the, the debate over, carbon offsets, for example, and whether these are a, a good thing or a bad thing. And that particularly around accounting standards and, and forestry products and things, that's been a big, big focus recently. And again, it's one of those areas where sometimes we've seen, you know, the use of offsets the product, but but without a real focus on reduction and so that people are not reducing internally, they're just saying that somebody else will make that reduction for them cause they will buy a product to do so. So I think it's that there are lots of areas that pretty much, but ideally what we're looking to see in, in businesses is a degree of reduction. A degree of simple disclosure that is verified, or certified. It says, this is what we're doing, this is why we're making these claims. Then I think everyone will feel much more comfortable and we'll start to have a debate that is, is very much grounded in how we, transition to a lower carbon economy rather than, talk about and aspire to a low carbon economy.

Tom Raftery: 16:52

Okay. And what about things like, penalties and enforcement for greenwashing? I mean, if you think of the likes of the G D R P legislation, the, there's a penalty there of, I can't remember the exact number, but it's something like 5% of annual turnover you can be fined. Do you think something similar like that for greenwashing would be a deterrent?

Hugo Kimber: 17:18

Yeah. I think we may start to see that in the same way that we may even start to see carbon taxes as well. And I think that it, it's, it's a good example because that was, um, when GDPR came in that was baked in right at the beginning, there had been, um, things around data disclosure and data penalties before that. So they were just kind of absorbed into the GDPR legislation. But eventually, if, if we don't continue to move fast enough, it may be the people. Um, there is a sanction and there is some degree of penalty. But as we stand today, we don't even have, you know, full public databases of all of the disclosure, um, necessarily in the UK and, and what sits behind it. So that will be quite difficult to do, but I could foresee that certainly being something that may happen, if it needs to happen, um, and it on current, performance, it probably will need to happen unless there is some radical improvement.

Tom Raftery: 18:15

Okay, so do we need to improve the quality of reporting that's happening right now, or do we need to get up the numbers of organizations that are reporting or both, or neither, or what do you think?

Hugo Kimber: 18:34

But I think both really. When we have clients who come to us who've reported before, we would find not less than 50% of those reports contained inaccuracies within them. And some of those would be basic carbon accounting errors. So I think that, reporting is certainly an issue. And we need it to be better. How we get it to be better is really a process of education, I think. And as I said earlier, if we don't have, good numbers, then we're not in a position to actually start to make good reduction pathways and to be able to understand where we're, or even communicate, back to your point about greenwashing as to what we are actually doing as a, as a business. So the, the reporting is, is a problem also for the consumer as well. Cause if the consumer is looking at some of the data that we look at, very difficult for them to disentangle that or to see where those gaps or issues were. So I think that reporting standards, are good, but they, they possibly to earlier point need, you know, more definition and potentially some degree of sanction. Right now there is, you know, there is nothing, but I think that's also compatible with being very early stage as far as reporting is concerned for compliance. And a lot of it came in during a point where Covid was radically affecting business performance, um, emissions impacts and everything else. So, you know, a number of agencies have been relatively light touch in the early stages, which is always sensible, I think, rather than jumping straight on it. But I can see us moving in that direction if reporting quality remains, you know, persistently low in a lot of cases.

Tom Raftery: 20:11

And how many organizations are reporting out to Scope three, you know, as a kind of a rough percentage?

Hugo Kimber: 20:21

hard to say as a, as a rough percentage. Cause everybody's reporting a little bit of it. Um, and it's, so, it's quite easy. Uh, I, I say that it's quite easy to be able to report some impacts, for example, around business travel. And that's something people are very aware of. And back to your point about helping people to report and how desirable it is, we, um, built a module that allowed people to do, core reporting, um, for SMEs, which they could just do without charge online. Just to give them a sense of how it worked and what they needed to do. And we found that people could report um, certain things such as, business travel, difficult when it got to waste or water, and certainly purchase goods and services, employee commuting, any of the 15 scope three categories. So we are seeing that although that comprises the vast majority of most businesses, um, in terms of their disclosure, it's still, it's still a very small minority. And certainly, it would be a, an enormous rarity, to see a report today that contained, disclosures in all 15 categories of scope three. Okay. So there's a lot of, and it it's an area where people go, well, it's really hard, it's really tough to do. And we've certainly, specialized in, in scope three over a long period of time. It, it isn't that tough and it doesn't have to be that tough, but when you look at it from the outside. When you look at the categories as you would go, wow, that's, that's, you know, possibly the two, two top two, to deal with bucket.

Tom Raftery: 21:47

Okay. Right, will we ever get there? All organizations, all reporting all the way out to all 15, uh, aspects of Scope three.

Hugo Kimber: 21:58

No, but I think even if we were to get to half of those, um, that would be, that would comprise a huge amount of what we need to report and reduce to be able to deliver the transition that world wants to see and has agreed to to to drive towards by 2050. So, you know, when we look at things like, end of life, um, and some full product life cycle, we do product lifecycle for a range of things and done them for, food products and um, bitcoin and a range of other things. They're very complicated. They require very good data, which again often doesn't exist. So, I think some of those will take more time, but where the bulk of those emissions sit around things like purchase goods and services particularly, and also things like employee commuting, in some cases business travel, third party use of vehicles. These are all things that can be measured, they can be reduced and you can work, for example, with your suppliers and your supply chain to start to align your suppliers with your targets and help them to, to reduce as well. That is a significant impact. I mean, it would be nice to think that as individuals we could make, a big impact if we all acted together, but the corporate ability to really, move the, the dial as it were, on global reduction is enormous. So hopefully we'll see certainly these in the, in the bigger emitting and easier to measure categories, more action sooner.

Tom Raftery: 23:22

Okay. The SEC came out in their proposals last year, uh, with the idea that all companies and in the coming years would've to report out to Scope three, but also even more intriguingly. They said that all these reports would have to be audited. Now those are proposals. They haven't come into force yet. They went out for public comment, so it may not end up happening. Yet. Do you think it's likely to happen that all companies would be mandated to report and the reports would have to be audited?

Hugo Kimber: 24:00

So I, I think, well, the SEC is an interesting, uh, has an interesting approach because you could argue that, that, um, certainly, uh, the US was quite a distance behind Europe, for example, in, in, um, setting targets and, um, and regulation. The SEC have arrived quite, um, you know, have, have made up a lot of ground and are now advancing beyond where some of the European, uh, counterparts may be. The idea that you can mandate scope three makes some degree of sense, but we don't even do it here yet because there's a recognition that we're still at a very early and probably immature stage around, measurement and reporting, which is what we've been talking about earlier. And the audit part of this. I mean, certainly at the moment for a large companies we report for, we we're, um, very clear on providing, um, not just reports, but also, a data trail that provides for internal audit. And we quite often will deal with financial auditors who will be asking us questions because they have to support the, financial reporting that's spent in which the carbon reporting is one, one part of it. So sometimes we field questions from them. I think at the moment we have an issue that, certainly if you were, if you're involved in carbon accounting in any way, shape or form, there is a, a lack of people who really understand what they're doing in this particular space. So I think if you were to mandate that tomorrow in North America or in the UK, it would cause some serious problems for, companies who large reporting, let's say large companies, SECR compliance, for example. Um, because there wouldn't be enough skills to go around. Okay. So we, we have to train everybody from scratch pretty much.

Tom Raftery: 25:44

Yeah. Yeah. Yeah. Yeah. Yeah. do you have any interesting customer stories you can speak to, whether you name the customer or not? I don't know, but, you know, just as in to give people listening an idea of a journey.

Hugo Kimber: 25:59

Y Yes, and I, and I think it's, um, we've got a number of clients who, who are very focused and put a lot of time and resource and effort into, being able to, to be the best they can be in their sectors. But, but probably more, more personally, you know, we, we do have customers who, who come to us because they know they need to do something. They're not necessarily highly motivated, but they know they need to do it. And investors who may have been pushing them in that directional compliance. And we have started with, you know, really quite low level, data quality. Some of that's financial data only, which is not the greatest, um, way of being able to try and measure it. And what we've found is that after people have started the process with that, well, we've gotta do this, but you know, we'll, we'll just make it as painless as possible for us, and we'll just move on. And then by the time they've actually done that, they've started to get on board with the entire process and they have done because they're seeing that, for example, investors and, and customers are interested in what they're saying and what they're doing, and then that feeds through into them wanting to do more granular work around data, for example. And they, and they want better data and then they're suddenly thinking, well, hang on, the energy prices are really high and we want to be able to reduce, some of the sort of cost and through, um, energy. And we're saying, well, yes that's exactly what your emissions reduction plan gives you. And, but you need your, you need to be able to report out at the unit level so you can see where your problems are and where you might focus your attentions and effort. So, It's quite an interesting journey. It doesn't always begin with, enthusiasm and wanting to be best in class. In some cases it, it, it's, it's, it's the reverse, but it, it, it's really exciting when we get to see, um, you know, clients going through that and you are in a second or third year of reporting with a client's, really started to hit a degree of excellence that allows him to, to target, set and move, move ahead of, of other peers in that sector.

Tom Raftery: 28:02

Nice. Nice. Okay, great. We're coming towards the end of the podcast now, Hugo, is there any question that I haven't asked that you wish I had or any aspect of this we haven't touched on that you think it's important for people to think about?

Hugo Kimber: 28:18

I think it's, you know, one of, one of the, questions for me, and you've touched on it to, to an extent is, we have all of these ambitious targets to get to where we want to be by 2050. And, and, you know, will we, and can we make it, is part of the question and, and what is required to do so. And that feeds back into what we've been discussing on the podcast today, which is, that we need people to be able to report. We need good data, we need clear frameworks. And if we get those things, so what you might describe as a fair wind, for example, in all of these areas that we've been discussing, then I very much think we have the ability to, get to where we want to go aspirationally, um, you know, as a, as a, um, global society. But right now we're in a very difficult phase where there is huge awareness, there is a lot of intent. The action doesn't necessarily always back the intent. There is a degree of confusion. And that's making it, making progress feel at the moment like it's quite, slow, but I think it's going to, to accelerate or I hope it's gonna accelerate quite rapidly. But I do think that as well, based on what I've seen, um, and it's having, having the tools to be able to, to do that job and the understanding, which is, you know, happily where, where we fit in and, um, what we do on a day-to-day basis. So we do have a reasonable window in what we're seeing around, but I think optimistic quietly is probably the answer.

Tom Raftery: 29:45

Great, great. Lovely. Hugo, if people would like to know more about yourself or any of the things we discussed in the podcast today, where would you have me direct them?

Hugo Kimber: 29:54

So they could go to our website, at Carbon Responsible, um, dot com or they could find us on LinkedIn, as well. Both of these, um, places that are probably the best places to go to get some sense of who we're and what we do. And, and obviously then we could be emailed off either of. Either of those two, um, contact points. There are other channels in social that are available, but these are the, the primary two areas where you can get hold of us frequently do.

Tom Raftery: 30:20

Okay. Superb. Hugo, that's been really interesting. Thanks a million for coming on the podcast today.

Hugo Kimber: 30:24

Not at all Tom. Thanks very much for having me.

Tom Raftery: 30:33

Okay, we've come to the end of the show. Thanks everyone for listening. If you'd like to know more about the Climate Confident podcast, feel free to drop me an email to Tom raftery@outlook.com. Or message me on LinkedIn or Twitter. If you like the show, please, don't forget to click follow on it in your podcast application of choice to get new episodes as soon as they're published. Also, please don't forget to rate and review the podcast. It really does help new people to find the show. Thanks, catch you all next time.